FILING FOR BANKRUPTCY IS NO SAVIOR

Declaring bankruptcy is usually the last option for debt-saddled individuals, however, it incurs severe consequences such as conflicts in securing loans and insurances. Sometimes, it might also lead to extra payment for items such if ever your are able to secure them. This is why as much as possible, it is best to avoid being bankrupt, and start climbing your way back the moment you see the first signs of an unmanageable debt.

Create a damage account

If your are on the brink of having all your funds drained, it is safe to assume that you have a clear idea of how much your overall debts are in comparison to the amount you earn. This calls for a review of your current financial state. Clear the tables and list all you have to pay for from bills to loans and compare it with your income. If your sum exceeds your earnings, you either have to act quickly and change you lifestyle or continue spiraling down to bankruptcy which also damages your credit ratings and impose restrictions on methods you can use for rebuilding.

Sell, replace, and choose cash

One solution towards recovery is using more affordable alternatives for pricey habits and expenses. Gym membership? Why not opt for a run in the park instead. Same thing as other wallet-draining practices such as dining out when you can cook for yourself and save more in the process.

For more difficult trim downs, you may consider putting up for sale your non-essential items such as rarely-used appliances and books. The proceeds you will get from doing this can be used for a lump-sum compensation to your highest interest loan.

Another thing, stick to low-limit and low-interest credit cards for emergencies only and avoid carrying all your cards especially in stores. Return to using cash instead, since it enables you to better monitor how much is left of your funds.

Say hi to your creditors

It is time to face the lending institutions you owe massive arrears to. If they are more than one, start with the bank where you have the longest history in. Bring your report and explain, as they can help you renegotiate your debt. Be sure to include the measures you have been taking to address the problem while you ask for advice.

Making the first move will leave a good impression and encourage them to coordinate with you, as long as you show your change of ways. In case you have accounts given to collection agencies, discuss the matter with them and if you are granted a repayment bargain, be sure to put it into writing for additional assurance. While it will leave a record on your report, you can have this wiped out one you have completed your compensation.

Don't fall into the same trap twice

If you end up successful, you may now relax and put bankruptcy worries our of your mind. However, you must retain the practice of debt management for a continued financial stability in the future. Besides, institutions do not give unlimited chances after you broke your pledge of handling your finances better.